Frustration Flashcards

Question

Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] principle

Answer 1

Where the performance is determined to be indefinitely impossible due to illegality the contract will be frustrated.

Answer 2

* Polish Company agreed to buy flax hackling machines for $4800 pounds * Deliver within 3months * £1000 deposit paid * English company started manufacturing * War started with Germany * Agent from Polish company asked for return of deposit because contract couldn't be performed because of war * English refused to return * Polish sued for breach: for failure to provide machines

Answer 3

English argued contract had been frustrated because it was illegal to deliver it Polish: no frustration because the contract expressly contemplated possibility of war Clause 7: Reasonable extension of time would be granted…. War Court said that clause 7 only covered clauses where an extension of time would be sufficient Where the performance is determined to be indefinitely impossible and there has been no agreement to continue regardless the contract has been frustrated

Answer 4

Consequences of frustration under common law: losses lie where they fall.

Answer 5

• Contract between shipmaster and sailor • Evidence in note: ○ Ten days after the ship, "Governor Parry', myself master arrives at Liverpool, I promise to pay to Mr. T. Cutter the sum of thirty guineas, provided he proceeds, continues and does his duty as second mate in the said ship from hence to the port of Liverpool. Kingston, July 31st, 1793 • Sail from Jamaica on 2nd August • Arrived in Liverpool 9th October. Mr Cutter died on 20th September - thrown into ocean

Answer 6

Losses lie where they fall - Sailor had to sail the remainder alone - Sailor kept payment (family received no money)

Answer 7

1. Parties must not have allocated the risk 2. The event must not have been foreseeable by the parties 3. The frustrating event must not have been the fault of the party seeking to rely on it

Answer 8

When there has been 'inordinate delay' Identify the probable duration of the delay at the time it arises Compare the relative proportion of the delay to the likely amount of time remaining on the contract.

Answer 9

Parties are released from all further obligations. and all money paid remains paid (does not need to be returned)

Answer 10

The plaintiff agreed with the defendant for the hire of a room for the purpose viewing the coronation procession. The price of the room was to be 141£ 15s. The defendant repeatedly wrote to the plaintiff asserting that by the agreement the price of the room was immediately payable, and demanding payment of it. The plaintiff in a letter written on May 29, in answer to one of the defendant’s letters, wrote: "there was really no fixed arrangement that cash was to be paid down, except that it was understood between us that the money should be obtained as". On June 10, 1902, the plaintiff wrote a letter to the defendant in the following terms: "I beg to confirm my purchase of the first-floor room of the Electric Lighting Board at 7, Pall Mall, to view the procession on Thursday, June 26, for the sum of 141£ 15s., which amount is now due. I shall be obliged if you will take the room on sale, and I authorize you to sell separate seats in the room, for which I will erect a stand. If the seats thus sold in the ordinary way of business do not realize the above amount by June 26, I agree to pay you the balance to make up such amount of 141£ 15s." The plaintiff paid 100£ before the date fixed for the procession, leaving a balance of 41£ 15s unpaid. The procession did not take place. The plaintiff thereupon brought an action to recover the 100£ which he had paid, and in that action the defendant counter-claimed for the unpaid balance of 41£ 15s.

Answer 11

The £100 was not recoverable because of the losses lie where they fall rule.

Answer 12

the total failure of consideration rule applies - and therefore when the contract is discharged due to frustration, the money should be repaid if no consideration has been provided.

Answer 13

Court held consideration was delivery machinery (big deposit - probably not just entry into contract)- machinery hadn't been delivered so there was no consideration and had to pay back the deposit money

Answer 14

Division 1—Introductory 35 Contracts to which this Part applies (1) This Part applies to a contract if the parties to the contract are discharged from the further performance of the contract because— (a) performance of the contract becomes impossible; or (b) the contract is otherwise frustrated; or (c) the contract is avoided by the operation of section 12 of the Goods Act 1958. (2) This Part applies to contracts made before or after 1 July 2008 if the time of discharge of the contract is after 29 September 1959. (3) This Part does not apply to— (a) any charter-party, except a time charter-party or a charter-party by way of demise; or (b) any contract (other than a charter-party) for the carriage of goods by sea; or (c) any contract of insurance except as provided for in section 40. Division 2—Consequences of frustrated contract 36 Adjustment of amounts paid or payable to parties to discharged contracts (1) All amounts paid to any party under a discharged contract before the time of discharge are recoverable. (2) All amounts payable to any party under a discharged contract before the time of discharge cease to be payable. 37 Court may allow amounts paid or payable to be recovered or paid Despite section 36, the court may, if it considers it just to do so having regard to all the circumstances of the case, allow a party to a discharged contract— (a) to whom amounts were paid or are payable under that contract before the time of discharge; and (b) who has incurred expenses before the time of discharge in or for the purpose of the performance of that contract— to retain or recover (as the case may be) the whole or any part of the amounts paid or payable to that party under the contract in an amount not exceeding the expenses incurred. 38 Parties to pay an amount for valuable benefits obtained (1) This section applies if a party to a discharged contract obtained a valuable benefit (other than a payment of money to which section 36 or 37 applies) before the time of discharge because of anything done by another party in or for the purpose of the performance of the contract. (2) Despite section 36, the benefited party is liable to pay to that other party any amount (not exceeding the value of the benefit obtained) that the court considers just having regard to all the circumstances of the case. (3) For the purpose of subsection (2), the court may have regard to— (a) the amount of any expenses the benefited party incurred before the time of discharge in or for the purpose of the performance of the contract, including any amount paid or payable by the benefited party to any other party under the contract and retained or recoverable by that party under section 36 or 37; or (b) the effect, in relation to the benefit obtained, of the circumstances giving rise to the frustration or avoidance of the contract. (4) For the purpose of this section, if a party to the contract has assumed obligations under the contract in consideration of the conferral of a benefit by another party to the contract on any other person (whether or not that person is a party to the contract), the court may, if in all the circumstances of the case it considers it just to do so, treat any benefit conferred on that other person as a benefit obtained by the party who has assumed those obligations. 39 Calculation of expenses incurred In estimating, for the purposes of this Division, the amount of any expenses incurred by any party to a discharged contract, the court may include an amount that appears reasonable for— (a) overhead expenses; and (b) work or services performed personally by the party. 40 Circumstances in which amounts payable under contract of insurance excluded In considering whether any amount is to be retained or recovered by any party to a discharged contract, the court must not take into account any amounts payable to a party under a contract of insurance because of the circumstances giving rise to the frustration or avoidance of the contract unless an obligation to insure is imposed— (a) by an express provision in the frustrated or avoided contract; or (b) by or under any enactment. Division 3—General 41 Circumstances in which contract provisions continue to have effect despite frustration If any contract to which this Part applies contains a provision that on the true construction of the contract— (a) is intended to continue to have effect in circumstances that operate or would, but for that provision, operate to frustrate or avoid the contract; or (b) is intended to have effect whether or not circumstances that operate or would, but for that provision, operate to frustrate or avoid the contract arise— the court must give effect to that provision and must only give effect to Division 2 to the extent that the court is satisfied that it is consistent with the provision of the contract. 42 Performed part of contract not frustrated If it appears to the court that part of a contract to which this Part applies— (a) is wholly performed before the time of discharge; or (b) is wholly performed before the time of discharge except for payment in respect of that part of the contract of amounts that are or can be ascertained under the contract— the court must treat that part of the contract as if it were a separate contract that had not been frustrated or avoided and Division 2 will only apply to the remainder of that contract. 43 Nature of action All actions and proceedings to recover amounts under this Part are taken to be founded on simple contract. 44 Limitation period Subject to Part II of the Limitation of Actions Act 1958, a cause of action under this Part is taken to have first accrued at the time of discharge.

Answer 15

Money that was paid before the contract was frustrated must be repaid, and money that was owing before the contract was frustrated need not be paid.

Answer 16

However, if the recipient incurred expenses related to the contract, and the court considers it “just” in the circumstances, it can allow retention or recovery in whole or part up to the total amount that was paid or owing.

Answer 17

If one of the parties has received a non-monetary but nonetheless valuable benefit before the contract was frustrated, the other party will recover an amount that the court considers “just” having regard to all the circumstances of the case.

Frustration Flashcards

(41 cards)